Hour Loop Reports Second Quarter 2024 Results


Profitability Continues Despite Warning Signs for the Overall Economy

Increases Full Year 2024 Revenue and Net Income Guidance

Redmond, WA, Aug. 09, 2024 (GLOBE NEWSWIRE) -- Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online retailer, announces its financial and operational results for the quarter ended June 30, 2024.

Financial Highlights for Second Quarter 2024:

  • Net revenues increased 25.2% to $28.1 million, compared to $22.4 million in the year-ago period;
  • Net income totaled $0.6 million, compared to net loss of $0.8 million in the year-ago period; and
  • Cash provided for operating activities for the six months ended June 30, 2024, was $0.9 million, compared to cash used in operating activities of $3.4 million in the year-ago period.

Management Commentary

“We are excited to report our second quarter 2024 results, in which we continued to deliver double digit revenue growth,” said Sam Lai, CEO of Hour Loop. “In addition, the revenue growth rate accelerates in the second quarter, compared with the first quarter.”

“Our gross margin and operating margin were both improved, compared with the year-ago period, because of efforts made for inventory quality and efficiency enhancement, operation efficiency improvement, as well as expenses management. Overall, we believe we’ve built a solid foundation to continue generating satisfactory growth while maintaining profitability.”

“Looking forward, we’re cautiously optimistic. Despite an uncertain economy, we continue to see good demand for our products so far in 2024. We are confident in our ability to continue delivering value to our vendors, customers, and shareholders.”

Second Quarter 2024 Financial Results

Net revenues in the first quarter of 2024 were $28.1 million, compared to $22.4 million in the year-ago period. The increase was primarily due to continued growth and maturity in our personnel and operating model, despite the overall e-commerce traffic slowdown and intense competition.

Gross profit percentage increased 5.0% to 55.7%, compared to 50.7% of net revenues in the comparable period a year ago. The increase was a function of improved product costs, enhanced inventory quality and efficiency, and efforts made on margin increase.

Operating expenses as a percentage of net revenues decreased 2.1% to 52.3%, compared to 54.4% of net revenues in the year-ago period. The decrease reflected better management of storage fees and labor costs.

Net income in the second quarter of 2024 was $0.6 million, or $0.02 per diluted share, compared to net loss of $0.8 million, or $0.02 per diluted share, in the comparable year-ago period. The increase was driven by reduced costs as a result of the reasons mentioned above and efforts made for expenses management.

As of June 30, 2024, the Company had $3.3 million in cash and cash equivalents, compared to $2.5 million as of December 31, 2023. This increase was mainly from the profit contribution.

Inventories as of June 30, 2024, were $14.7 million, compared to $14.3 million as of December 31, 2023. The increase is a combination of good sales momentum in the first half of 2024 and purchase growth in view of the upcoming holidays.

Full Year 2024 Financial Outlook

For the full year 2024, Hour Loop is increasing its guidance for net revenue to be in the range of $165 million to $250 million, representing 25% to 89% year-over-year growth. The Company also increases its guidance for net income in 2024 to be in the range of $4 million to $6 million.

About Hour Loop, Inc.

Hour Loop is an online retailer engaged in e-commerce retailing in the U.S. market. It has operated as a third-party seller on www.amazon.com and has sold merchandise on its website at www.hourloop.com since 2013. Hour Loop further expanded its operations to other marketplaces such as Walmart, eBay, and Etsy. To date, Hour Loop has generated practically all its revenue as a third-party seller on www.amazon.com and only a negligible amount of revenue from its own website and other marketplaces. Hour Loop manages more than 100,000 stock-keeping units (“SKUs”). Product categories include home/garden décor, toys, kitchenware, apparel, and electronics. Hour Loop’s primary strategy is to bring most of its vendors’ product selections to the customers. It has advanced software that assists Hour Loop in identifying product gaps so it can keep such products in stock year-round including the entirety of the last quarter (holiday season) of the calendar year. In upcoming years, Hour Loop plans to expand its business rapidly by increasing the number of business managers, vendors, and SKUs.

Forward-Looking Statements

This press release contains statements that constitute "forward-looking statements" including with respect to Hour Loop’s business strategy, product development and industry trends. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of Hour Loop. While Hour Loop believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to Hour Loop on the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in Hour Loop’s filings with the Securities and Exchange Commission, as the same may be updated from time to time. Thus, actual results could be materially different. Hour Loop undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, after the date of this release, except as required by law.

Investor Contact

Finance Department, Hour Loop, Inc.
finance@hourloop.com

HOUR LOOP, INC.
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars, except for share data)
As of June 30, 2024 and December 31, 2023
(Unaudited)

  June 30,  December 31, 
  2024  2023 
       
ASSETS        
Current assets        
Cash $3,346,897  $2,484,153 
Accounts receivable, net  753,244   747,650 
Inventory, net  14,658,081   14,276,555 
Prepaid expenses and other current assets  467,770   504,973 
Total current assets  19,225,992   18,013,331 
         
Property and equipment, net  104,521   148,788 
Deferred tax assets  732,919   1,304,215 
Operating lease right-of-use lease assets  153,404   83,946 
Total non-current assets  990,844   1,536,949 
TOTAL ASSETS $20,216,836  $19,550,280 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities        
Accounts payable $5,688,328  $3,812,954 
Credit cards payable  2,283,931   4,404,445 
Short-term loan  617,284   652,422 
Operating lease liabilities-current  159,915   82,269 
Income taxes payable  33,700   - 
Accrued expenses and other current liabilities  1,083,990   1,972,512 
Total current liabilities  9,867,148   10,924,602 
         
Non-current liabilities        
Operating lease liabilities-non-current  -   2,363 
Due to related parties  4,170,418   4,170,418 
Total non-current liabilities  4,170,418   4,172,781 
Total liabilities  14,037,566   15,097,383 
Commitments and contingencies  -     
         
Stockholders’ equity        
Preferred stock: $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding as of June 30, 2024 and December 31, 2023  -   - 
Common stock: $0.0001 par value, 300,000,000 shares authorized, 35,108,804 and 35,082,464 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively  3,510   3,508 
Additional paid-in capital  5,763,648   5,727,650 
Retained earnings (accumulated deficit)  462,342   (1,252,622)
Accumulated other comprehensive loss  (50,230)  (25,639)
Total stockholders’ equity  6,179,270   4,452,897 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $20,216,836  $19,550,280 

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

HOUR LOOP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In U.S. Dollars, except for share and per share data)
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)

  Three Months  Three Months  Six Months  Six Months 
  Ended  Ended  Ended  Ended 
  June 30,  June 30,  June 30,  June 30, 
  2024  2023  2024  2023 
             
Revenues, net $28,070,707  $22,417,448  $52,751,829  $43,485,057 
Cost of revenues  (12,445,297)  (11,059,899)  (22,674,213)  (22,511,806)
Gross profit  15,625,410   11,357,549   30,077,616   20,973,251 
                 
Operating expenses                
Selling and marketing  12,843,697   10,245,912   24,017,888   19,752,883 
General and administrative  1,844,517   1,958,849   3,584,360   3,679,839 
Total operating expenses  14,688,214   12,204,761   27,602,248   23,432,722 
                 
Income (loss) from operations  937,196   (847,212)  2,475,368   (2,459,471)
                 
Other (expenses) income                
Other expense  (4,777)  (1,063)  (5,933)  (3,943)
Interest expense  (61,984)  (62,392)  (124,096)  (123,488)
Other income  59,477   20,317   87,511   36,352 
Total other expenses, net  (7,284)  (43,138)  (42,518)  (91,079)
                 
Income (loss) before income taxes  929,912   (890,350)  2,432,850   (2,550,550)
Income tax (expense) benefit  (280,762)  120,982   (717,886)  545,938 
                 
Net income (loss)  649,150   (769,368)  1,714,964   (2,004,612)
                 
Other comprehensive loss                
Foreign currency translation adjustments  (8,058)  (9,192)  (24,591)  (7,853)
                 
Total comprehensive income (loss) $641,092  $(778,560) $1,690,373  $(2,012,465)
                 
Basic and diluted income (loss) per common share $0.02  $(0.02) $0.05  $(0.06)
Weighted-average number of common shares outstanding  35,108,804   35,055,293   35,102,203   35,056,510 

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

HOUR LOOP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars)
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)

  Six Months  Six Months 
  Ended  Ended 
  June 30,  June 30, 
  2024  2023 
       
Cash flows from operating activities        
Net Income (loss) $1,714,964  $(2,004,612)
Reconciliation of net income (loss) to net cash used in operating activities:        
Depreciation expenses  70,920   68,634 
Amortization of Operating lease right-of-use lease assets  98,773   179,774 
Deferred tax assets  571,296   (545,938)
Stock-based compensation  36,000   34,333 
Inventory allowance  645,379   1,054,242 
Changes in operating assets and liabilities:        
Accounts receivable  (5,594)  30,045 
Inventory  (1,026,905)  3,329,545 
Prepaid expenses and other current assets  37,203   (130,528)
Accounts payable  1,875,374   (1,549,988)
Credit cards payable  (2,120,514)  (2,884,424)
Accrued expenses and other current liabilities  (888,522)  (813,678)
Operating lease liabilities  (92,899)  (191,845)
Income taxes payable  33,700   - 
Net cash provided by (used in) operating activities  949,175   (3,424,440)
         
Cash flows from investing activities:        
Purchases of property and equipment  (34,593)  (5,881)
Net cash used in investing activities  (34,593)  (5,881)
         
Effect of changes in foreign currency exchange rates  (51,838)  (13,597)
         
Net change in cash  862,744   (3,443,918)
         
Cash at beginning of the period  2,484,153   4,562,589 
         
Cash at end of the period $3,346,897  $1,118,671 
         
Supplemental disclosures of cash flow information:        
Cash paid for interest $9,883  $167,017 
Cash paid for income tax $109,260  $- 
Noncash investing and financing activities:        
Operating lease right-of-use of assets and operating lease liabilities recognized $172,903  $28,407 

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.